This is the alarming headline of an article in this weeks sunday times.
It refers to " dramatic " falls in the prices charged for Villa rentals this summer.

40% reduction is not unusual.
One example " Villa Casa Terasa " in Carvoeiro was £1969 now £1591.
( flights not included ).

However as I know of owners who have no trouble renting via owners sites is this a reflection of a trend away from booking with holiday companies to direct booking with owners !!.

Also horrific picture in todays daily mail fo drought conditions across europe including Portugal

I also read that article, but my first reaction was that the "discounts" are merely bringing the prices down to what they should have been in the first place - even through Agencies. Its not hard to research prices on the Internet these days, and sensible buyers are doing research.

With the ease of using the internet and established sites why use an agency if you have reliable management/maintainence.

If you look at the prices charged by agents, holiday companies they must be making a huge margin if you compare similar properties on the " direct sites "?
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Seems like more of the same to me - not necessarily a drop in tourism - merely another example of the shift to "do it yourself" (same as the fall in package bookings) - as these things change there will certainly be some "shift" in the nature of the "support businesses" and some will fail (as some package operators will eventually abandon Iberia as a whole in favour of other destinations).

Although there are these symptoms of change all round it doesn't necessarily mean decline - just structural change in response to changing markets